Letter to Secretary of Commerce to Address China's Unfair Market Practices
Chairman John Moolenaar (R-MI) of the House Select Committee on the Chinese Communist Party wrote to Secretary of Commerce Gina Raimondo drawing her attention to China's distortion of fair market practices and its impact on the global economy, using the CCP's manipulation of the resin industry as a case study for the broader trend. Chairman Moolenaar also urged Commerce to apply the "special rules for costs", which empowers Commerce to adjust reported costs submitted by foreign producers and counter overcapacity and market distortion when they occur in the American economy.
The Chairman wrote, "The effects of the PRC’s overcapacity extend far beyond individual sectors—affecting the broader U.S. economy and undermining entire supply chains. There is a clear connection between falling PRC capacity utilization and increased production capacity that, when paired with declining domestic prices, puts downward pressure on prices outside the PRC. The artificial depression of prices by oversupply calls for adjustments in the cost structures submitted by these foreign producers. These dynamics lead to PRC products flooding global markets with underpriced products, actively eroding the competitiveness internationally and particularly for American businesses. This trend disrupts fair pricing mechanisms, encourages overinvestment in unsustainable production, and forces foreign producers to rely heavily on exports—often at the expense of U.S. manufacturers. Compounded by government subsidies and opaque pricing structures, the PRC’s overproduction has resulted in artificially low prices both in the U.S. and global markets."
Using the resin industry as a case study, the Chairman presented six key quantitative measures for Commerce to consider as a way to define overcapacity and to demonstrate the harmful effects of the CCP's harmful market practices on U.S. producers:
- Falling Utilization of Existing Capacity
- Overinvestment in New Capacity
- Increasing Reliance on Exports
- Falling Prices in Domestic Markets
- Falling Prices in Export Markets
- Shrinking Profit Margins
View the full letter HERE.